Bailout of banks soars to €200bn

German giants are plotting to raise billions of euros in new capital as EU leaders fall out over how to shore up lenders

Deutsche Bank's chief has insisted that new funds are not needed (Dan Kitwood)

Some of Germany’s biggest banks are drawing up plans to raise billions in new
capital as Europe’s leaders edge closer to a €200 billion (£170 billion)
eurozone bank bailout.

Angela Merkel, the German chancellor, will hold crunch talks with her French
counterpart, Nicolas Sarkozy, in Berlin this evening to hammer out details
of a bank rescue plan.

Eurozone banks are expected to be forced to raise money to cover losses from
loans to Greece.

A rift has developed, however, between Germany and France over where the money
should come from.

Merkel insists banks should raise cash from private investors before turning
to the state. Countries that could not afford the bill would then draw on
the European Financial Stability Fund (EFSF), a facility originally designed
to bail out Greece, Ireland and Portugal.

Sarkozy, who is desperate to protect France’s AAA credit rating, believes
banks should go straight to the €440